Providing the balance of power : Ontario Hydro's plan to serve customers electricity needs

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PROVIDING THE BALANCE OF POWER

On the cover is a design with the words:
“Providing the Balance of Power.” Within the design are
a sphere and a cube, balanced by a pyramid.

These shapes symbolize the three activities involved in
Ontario Hydro’s Demand/Supply Plan to provide electrical
energy to the people of Ontario for the next 25 years.

The three activities are:

a

Assessing Needs

Electricity will be expected to provide a range of
services in home, work, recreation and
community life. Planning must assess needs and
compare them to resources.

a.

Defining Resources

Resources are the existing facilities and the future
options available to meet customer needs.

a

Making Plans
As needs grow and existing resources decline,
plans must add the right amount
of new resources to maintain the balance.

I SuMMARY OF UPDATE
1

I] INTRODUCTION
Forecasting Future Needs:
Defining Uncertainty
s)

Capability of the Existing System
6
The Options for Meeting Future Needs
6
Demand Management
6
Non-utility Generation
ii
Hydraulic Generation
8
Major Supply Options
8
Selecting the Options
10
The 1989 Plan and Approvals Requested

10

<UPDATE 1992>

TABLE OF CONTENTS

II] UPDATES TO ELEMENTS IN THE 1989
DEMAND/SUPPLY PLAN
Introduction
11
More Electricity Savings
12
Getting More From the Existing System
13
Contribution From Non-Utility Generators
13
Changes to the Hydraulic Plan

13
Deferred Requirements For
Major Supply Options

13

IV THe UPDATE

Introduction - Elements of the
Plan UPDATE
15
Plan UPDATE Impacts
15
Environmental Impacts
5
Financial Impacts
18
Dealing With Uncertainty

18

V_ PusBLic REVIEW

Formal Review:
The Demand/Supply Hearing
19
Progress of the Demand/Supply Hearing
IY
Update of the Plan and Request for Approvals

19
Communications About
The Demand/Supply Plan

20

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UPDATE

Le ee oor 2

1 SUMMARY

This book describes the features of the 1992 UPDATE to Ontario Hydro’s 25 year
Demand/Supply Plan to serve customers’ electricity needs.
It reflects Hydro’s continuing commitment to electricity service which is reliable and
reasonably priced, and reflects concern for the environment.
°
Any plan that extends over a 25-year period will have to be updated as
circumstances change. In updating the Plan to reflect these changes

Hydro follows the same basic planning principles as in the original submission.

The Need for Electricity
The 1989 plan identified a range of forecasts for future electricity growth.
The forecast in this update has lower demand for electricity
in the short term, reflecting the major downturn in the provincial economy.
In the long term, demand for electricity is reduced by efficiency

improvements and fuel switching.

Getting More From Priority Options
The 1989 Plan identified a number of priority options for meeting future requirements
which remain valid. The top priority remains making
the maximum use of demand management. Other priorities are to make the most
effective use of the existing system; to encourage
the development of non-utility generation (electricity generators in Ontario other than
Ontario Hydro) to the extent it is economic and needed

to meet future requirements; and to develop economic hydraulic capacity.

More Demand Management
With success to date in an ambitious program to help customers use electricity more

efficiently, demand management programs are now anticipated to

<Summary of UPDATE>
1

<UPDATE 1992>

provide even greater savings by the end of the planning period. Savings are
now forecast to contribute 9,860 megawatts (MW) by 2014,
compared to 5,570 MW in the original Plan. This increase in projected savings reflects
higher efficiency standards for electrical equipment and
additional opportunities resulting from proposed legislation allowing Hydro to promote
the use of alternative fuels in applications where electricity is not
the most appropriate energy, and when the use of an alternative fuel would

provide benefits to customers and to Hydro.

More Use of Existing Facilities
In order to make the best use of the existing system, Ontario Hydro is planning
to extend the life of several of its fossil generating plants.
This will defer the need for approximately 4,300 MW of new major supply to time
periods beyond the 2014 planning horizon. With life extension of
fossil stations, it is also planned to install additional environmental control equipment.
Even with this equipment it is believed that extending the life

of existing fossil units will prove to be economic.

Non-utility Generation (NUG)
In the 1989 Plan, Non-Utility Generators were forecast to provide some 2,120 MW of
power by 2014. Due to the rapid development of this industry, the contribution from this
source is forecast to increase and Hydro now feels it can, if needed, rely on NUGs to

provide up to 4,200 MW by the year 2014 to help meet customer needs.

Adjustments to the Hydraulic Plan
Over the first 60 years of the century, Ontario Hydro has relied on renewable water
7 resources to meet much of the Province’s requirements. :
- The 1989 Demand/Supply Plan projected that 2,850 MW of new hydraulic capacity could |

be economically developed to meet the demand for electricity by the year 2014.

Megawatt (MW): is a unit of measurement for electrical power. The power needs for the city of Hamilton are about 1,000 MW
and for Kingston about 100 MW.

<Summary of UPDATE>
2

<UPDATE 1992>

Hydro’s planning approach identified hydraulic as a priority option. However, since
the 1989 Plan, the relationship between the
Ontario Government and the First Nations a Ontario, and the relationship between
Hydro and aboriginal peoples have evolved.
°
As a result, Hydro officially suspended planning for six new stations and two extensions
to existing stations on the Moose and Abitibi Rivers
until a process for co-planning studies related to Hydro developments in that Basin has
been agreed to by the affected aboriginal groups.
°
Primarily as a result of these changes, Ontario Hydro estimates that up to 1,800 MW of
additional hydraulic capacity can be relied on for

planning to 2014, and approvals are being requested consistent with this estimate.

Major Supply
Ontario Hydro is requesting the approval for the need for the transmission facilities to
incorporate electricity purchased from Manitoba.
The purchase from Manitoba will provide approximately 1,000 MW starting in 2000.
.
Approval requests by Hydro to the Province’s Environmental Assessment Board for the
need for new facilities are based ona five year action plan,
defined as those projects for which a project environmental assessment document is
expected to be submitted within five years of an
Environmental Assessment Board (EAB) decision on the Demand/Supply Plan.
°
The original Plan submission included requests for approval of the need for two nuclear
stations and a number of natural gas-fired
combustion turbine units, some of which could be converted to combined cycle or
coal gasification units at a later date. As a result of the

economic conditions, more demand management, additional economic non-utility

<Summary of UPDATE>
3

<UPDATE 1992>

generation, and the extension of fossil station lives, most
of the need for major supply now occurs later in the planning period. This is beyond

the period for which Hydro is seeking approvals

The Public Review Process
Following the release of the original Demand/Supply Plan, a variety of public feedback
activities were carried out across the province. These included information
centers, and communications programs with groups, organizations and governments.
These activities have informed Hydro about public and governments’
comments and concerns. The UPDATE reflects the input by the various parties that have
been involved over the course of the electricity planning process.
°
The formal mechanism for reviewing the Demand/Supply Plan is the hearing before the
Environmental Assessment Board of Ontario.
°
Hydro continues to seek approval for the requirement and rationale for transmission
associated with the 1,000 MW purchase from Manitoba,
and for up to 1,800 MW of hydraulic generation. These approvals for 2,800 MW
of new supply represent an investment of approximately $7 billion.
°
The issues which will be considered by the EAB will include the appropriate level of
demand management and non-utility generation for planning
as well as the relative merits of major supply options.
°
| Ontario Hydro needs to continue to review its plans and, on a periodic basis, adjust these :
plans to respond to changing circumstances and new information. |
Recognizing the continuous nature of planning is important both for Hydro and

for the ongoing public review of Hydro’s plans.

<Summary of UPDATE>
4

<UPDATE 1992>

II INTRODUCTION

: In 1989, Ontario Hydro released a plan to serve
: the long-term needs of Ontario’s electricity

» FORECASTING FUTURE NEEDS:

2 DEFINING UNCERTAINTY
_ users. The 25-year plan, was described in the |

: document “Providing the Balance of Power.” |

- Consultation with communities across the |

: Province, with business and interest groups,

: and reviews by government gave Hydro feed- :

- back of what Ontarians wanted to see as pri- |

: orities in electricity planning.

Electricity planning starts with a forecast of how
much electrical power customers will need in |
the future. Many factors go into making a fore-
cast, such as population and economic growth, |
the price of different forms of energy, and how :

- efficient future uses of electricity will be.

From that consultation and review, and from |

| its own planning analysis, Hydro developed sev-

- eral priorities as the foundation of its planning: -

| top priority to reducing growth in electricity :
pp gs :

demand (demand management),

: ® high priority to getting the most from the ,

existing electricity system,

The farther out in time, the more uncertain :
forecast will be. Hydro produces a range of :
predictions (upper, median, and lower) to define |
the range of uncertainty. (see Figure 1). :

The initial or basic forecast recognizes devel-
opments in our society that could influence |

' the use of electricity such as the growth in :

| ® high priority to encouraging efficient and

economic generation of power by inde- ©

pendent electricity producers (non-utility ©

generators),

the economy, the natural improvement of the :
energy efficiency of products we use, the degree
to which we use electricity rather than other :

- forms of energy, and some general longer term |

| B high priority to developing the Province’s ;

economic hydraulic potential.

assumptions about future regulations with |

- respect to the environment and energy effi-

In addition, Hydro’s planning approach ;

: assumed that major supply options for 2

supplying electricity, such as coal, nuclear, and ©

- natural gas facilities, are kept open for future |

- development.

ciency standards.

Once the forecast range has been deter- :
mined, Hydro develops a primary forecast which :
takes into account the effect of electricity sav-

- ings programs (demand management) designed |

: to slow down growth in demand. It also takes :

: into account the amount of electricity that no :

<Chapter Two>

5}

<UPDATE 1992>

Figure 1 Range of Uncertainty
Primary Load Forecast Bandwidth — 1992 Update

Upper.
Median
35
Lower
30
= 29
©
20
15
10
5
0
1992 94 96 98 2000 02 04 06 O08 10 12 14
Year
GW= gigawatt, or 1,000 megawatts
Figure 2. The Hydro System in 1993
® Nuclear
Fossil
[1 Hydraulic

<Chapter Two>

6

| longer has to be supplied once non-utility gen- :

- erators start producing their own power.

: CAPABILITY OF THE EXISTING SYSTEM ~
Planning then looks at the capability of the exist- :
- ing electricity system to meet demand over the :
: next 25 years. That projection must take into
: account any retirements due to aging and/or :
: obsolescence of existing generating stations. :

The make-up of Ontario Hydro’s existing |

~ system is shown in Figure 2. The projected capa- _
2 bility of the existing system is measured against :
: the forecast range of future primary electricity :
: demand to determine future requirement and :
2 need dates. The need date is where the forecast 2
: demand begins to exceed available supply. 7

: THE OPTIONS FOR MEETING
: FUTURE NEEDS

2 In an integrated demand/supply plan, future :
: requirements can be met by options either to
: reduce future growth in demand or by options :
2 to increase future supply. The objective is to :
2 keep demand and supply in balance ina cost :
: effective and environmentally acceptable way. :

Demand Management |
- Demand management includes activities under-
: taken by Hydro to help customers save elec- :
: tricity, shift its use from peak times, use it more :
- efficiently, and promote alternative fuels where
"appropriate. To support this, a wide range of
- utility programs are available to all types of -
2 customers — residential, commercial, agricul- :
tural, and industrial. 7

<UPDATE 1992>

Demand management measures include: (MgamecemCCT CRC nauitit mite oe

? 1. Electrical Efficiency Improvements (EEI): the :

Residential/ Commercial Industrial

_ development and promotion of more energy |
efficient electrical equipment and conservation |
- measures such as lightbulbs, motors or |

- improved insulation;

: 2. Load Shifting (LS): incentives to induce cus- ,
- tomers to use less power during periods when :

- demand is at its peak;

- 3. Customer interruptible loads (CIL): where indus- :
trial customers agree, in return for a lower rate, :
- to reduce their demand toa specified level at :

- certain times on request from Hydro.

2 4. Fuel Switching (FS): inducing customers to :
- use alternatives to electricity, such as natural -
gas, where there are benefits to the customer -
and to Hydro. This form of demand management :
: was not included in the 1989 plan, but is a sig- :
: nificant development, discussed in section III.
: The objective of demand management pro- :
grams is to meet customer needs for energy :
: services while using less electricity, or by using :
: another form of energy where appropriarte. :
: Because reducing the growth of future demand :
defers the need to build and operate new sup- :
ply facilities, demand management measures 2
can also be environmentally preferable to new

2 supply.

_Non-utility Generation

: Non-utility generation is electrical generation :
: owned and operated in Ontario by independent :
: generators, such as private and municipal util- |
- ities, and independent power producers. The :
: electricity generated can be sold to Hydro or :

: used to meet the producer's own needs.

- Non-utility generation uses three different :
_ primary forms of energy: falling water; con- :
: ventional fossil fuels, chiefly natural gas; and :
- waste fuels, such as wood waste, landfill gas :

7 (methane), and municipal solid waste.

Energy efficient lighting
High efficiency motors
Heat pumps
Energy efficient appliances/equipment
Water heater wrap, etc
Energy efficient showerheads
Building Improvements
Insulation
Weather stripping
Window replacements
R2000 building standard
Ventilation
Controls/timers
Energy efficient design/performance
optimization (compressors, fans, pumps)
Refrigeration
Energy management systems
Efficient heating, ventilation, air-conditioning systems
Agricultural technologies
(milk heat reclaimers, heater sizing, heat exchangers)
Energy efficient streetlighting
Energy efficient cooking systems
Individual metering
Industrial drive (turbo expanders, compressed air)
Industrial Processes

(effluent treatment, furnace efficiency improvements)

Agricultural

<Chapter Two>
7

Configurations of Fossil and

Nuclear Stations

Both fossil and nuclear stations can be con-
structed in various configurations typically
from one to four units.

Natural gas-fired facilities tend to be
available in smaller units, while conven-
tional coal-fired and nuclear units are typ-
ically larger, reflecting better economy of

scale for that technology.

<UPDATE 1992>

Cogeneration is a process in which gen-

: process heat for other energy applications in
: an industrial process. Cogeneration makes effi-
- cient use of fuel, thus helping the cogenerator 2
: get the most value from the energy input, and :
: improving the competitive position of Ontario |
- industries. Cogeneration can use either fossil :
: fuels such as natural gas or coal, or other sources 2
: such as wood waste.
2 Because of potential environmental and 2
resource use advantages, Ontario Hydro gives :
: preference to the encouragement of non-utility :
2 generation which utilizes a renewable energy 2
source like falling water, or burns a waste prod- :
uct, or uses a conventional fuel in high effi-
: ciency cogeneration. : 2. Combustion Turbine Units (CTUs): may burn :
| : natural gas or oil. Fuel is fed directly to the :
Hydraulic Generation
: In decades past, the electricity system was built
on the availability of hydraulic power from
: falling water. It is a renewable energy source. :
2 Hydraulic facilities are inexpensive to operate, 2

maintenance than fossil or nuclear stations. :
2 Hydraulic developments also have large capital :
: requirements. 2 boilers. These convert the heat of the hot :
2 However, most of the economic sites have :
: been developed. Some of the remaining sites :
"are unavailable for development because of :
regional environmental impacts or competing | 4. Integrated Gasification Combined Cycle (IGCC):
: land and water uses.
Much of the remaining potential is with -
2 small to medium sites in northern Ontario, often
2 in land areas where aboriginal people hunt, :
- fish, and trap for their livelihood. The potential
' available for development must reflect these

_ and other aboriginal interests.

<Chapter Two>
8

, Major Supply Options

- erators simultaneously produce electricity and

A. Fossil Generation

2 The main fossil energy sources for producing |

electricity are oil, coal, and natural gas. Natural

- gas and oil facilities are generally less expensive :

to build than coal or nuclear plants, but fuelling
costs are higher. The main technologies that :
can be used for fossil generation are:

1. Conventional Steam Cycle: fuel such as pul- |

verized coal is fed to a boiler. Combustion takes :
place in the boiler. Heat is recovered in the :
boiler through water and steam-cooled tubes, ©
and converted to higher pressure superheated —
steam. [his steam spins a turbine which drives
a generator to produce electricity. :

: combustion chamber along with high pressure 2

air. The fuel and air are burned, producing hot :
gases which expand through the turbine blades |
causing the turbine to rotate at high speed. |

- The turbine drives a generator.

3. Combined Cycle (CC): this technology is |

: have long life expectancy, and require less |

made up of combustion turbine units in com- |
bination with appropriately sized heat recovery

exhaust gas from the CTU into steam, which |
then drives a conventional electrical generator. ©
The fuel can be natural gas or oil.

- this process takes the combined cycle conversion

process one step further by adding a coal gasi- |
fication plant to permit the use of lower-cost
coal as primary fuel. The IGCC process inte- :

: grates both combined cycle and coal gasification

processes, and the development of the facility -

: can be phased so that it can start as a CTU, -
2 be developed as a combined cycle fueled by :
2 natural gas, or further developed with the addi- -
tion of a coal gasification plant. |

<UPDATE 1992>

; i Figure 4 How Electricity is Used in Ontario (1990)
- Environmental Emissions and Controls

- Burning coal produces air emissions such as : Wihenone
HM Appliances

: sulphur dioxide (SOy), nitrogen oxides (NOx), : (including light
including lighting

- and carbon dioxide (CO), as well particulates :

: Space heating
such as fly ash. SO9 and NOx are known to |
_| Water heating

contribute to acid rain, and COy contributes
. [J Space cooling
_ to the greenhouse effect and global warming. |

- Water is used for cooling and for various pro- : mee

: cesses, and solid waste (bottom ash) is produced :

- from the operation of coal stations. :

: Environmental controls can reduce all but :

- CO emissions. SOy emissions can be reduced : mine otee

: B® Lighting

- by burning low sulphur coal, and through the :

- installation of Flue-Gas desulphurization (FGD) a ERTS

7 also known as scrubbers. Scrubbers are large | be ie

_ chemical facilities that work on large volumes | avo

- of flue gases. The scrubber process also leaves

2 a by-product which can be used as landfill or :

: treated to make wallboard. :

: NOx can be reduced with low NOx burners, :

: combustion process modifications (CPM), or :

: other technologies such as urea injection or : in the factory

- Selective Catalytic Reduction (SCRs). With : mee:

: SCRs, nitrogen oxides are reduced to nitrogen : lege eae
® Lighting

- and water using anhydrous ammonia and a cat- :
M@ Electrolysis
- alyst. The used catalyst can be recycled.

- Particulates from the gases produced by |
- combustion can be removed by electrostatic |
: precipitators or fabric filters.

Burning natural gas produces no SOs or par- |

: ticulate material, and less CO, than from coal :
: combustion. Natural gas combustion does pro-
- duce NOx, but less than coal, and SCR or other :
- NOx controls may be appropriate for facilities :

: that are used frequently.

_ B. Nuclear Generation

- A nuclear reactor and associated steam generator 7
- perform the same function as a boiler in a con- :
- ventional steam cycle plant. Heat is generated 2
- by nuclear reaction, and to sustain this reaction 2

<Chapter Two>
9

prevalent elsewhere in the world uses ordinary |

water but requires enriched fuel.

Environmental Emissions and Controls

Nuclear plants are designed to contain radioac- |
tivity with a series of safety barriers including :
sheathing on the fuel, heat transport system, |

and concrete containment of the reactor build-

ing. Various safety and emergency cooling sys- :

tems are part of the design.

Used fuel and other nuclear wastes currently :
in storage at nuclear stations also have to be 2
managed carefully for eventual disposal. Used ©
- fuel is stored at nuclear stations until it can 2
be transported to a disposal facility. Hydro is :
- supporting the development of the Canadian :
disposal concept for used fuel coordinated by 2

Atomic Energy of Canada Ltd. through the 2

Canadian Nuclear Fuel Waste Management

- Program. This concept would encapsulate fuel -

in long-lasting containers to be sealed in a vault

_ The concept is currently being reviewed by

_ the Federal Environmental Assessment and :

- Review Process. Government and public

- reviews and approvals are required before a :

- facility is sited and operational.

_C. Major Purchases

- Another major supply option is a purchase

_ from a major utility outside the province. The

a major purchase from Manitoba Hydro.

the neutrons are slowed down or moderated. |
In the Canadian CANDU system, the moderator |
is manufactured heavy water whose use elim-
inates the need for enriched uranium fuel. The :

ight water design (pressurized water reactor) -

<UPDATE 1992>

SELECTING THE OPTIONS

casting demand and determined the ability of ©
the existing system to meet those requirements, | able to Hydro at the time, the 1989 Demand/ _
Hydro’s planning approach is to call on the : 3
- options in order of priority:
First, develop Demand Management that is |

- economic and achievable:

as required, provided that those purchases are -
economic compared to building major supply, -
- and giving a preference to generators using |

renewable resources or efficient cogeneration;

- and, develop economic Hydraulic Generation -
taking into account environmental, aboriginal, :

and community concerns.

Last, develop Major Supply options that are |

most suitable for meeting customer needs.

Criteria for evaluating and selecting options |

are the following:
* customer satisfaction
° reliability standards

- © worker and public safety requirements |

and standards

© environmental requirements and standards
_ deep in the stable rock of the Canadian shield. : :

¢ low cost of electricity service

© social acceptance

e technical soundness

flexibility

° resource preferences

| ¢ diversity
© resource smoothing
© environmental characteristics, beyond :

requirements and standards

: ¢ public safety characteristics beyond require- 7
_ 1989 Demand/Supply Plan already included . ;

ments and standards

economic impact

- © other social considerations

<Chapter Two>
10

| THE 1989 PLAN AND APPROVALS
' REQUESTED

Having defined future requirements by fore- |

Using the planning strategy and options avail- :

Supply Plan proposed a 25-year plan that would |

- rely ona mix of demand management, non- :

utility generation, transmission (to carry the :

: Manitoba purchase), gas-fired CT Us (some of :

Next, make Non-utility Generation purchases | which would be convertible to IGCC), hydraulic -

generation, and CANDU nuclear stations. :
The 1989 Demand/Supply Plan was sub- -

mitted to the provincial Environmental |

- Assessment Board. (See Section V for a dis-

cussion of the formal EAB process and public -
review activities.) Hydro sought approvals relat-

- ing to the need for certain components of the :

Plan, namely, hydraulic, fossil and nuclear gen- :

- erating stations, and a transmission line in :

northern Ontario to incorporate the Manitoba |

- purchase.

Other components of the Plan do not require :

approval, for example, demand management

programs, purchases from independent power |

_ producers, and rehabilitation work on existing |

stations. :
Approvals were sought based ona five-year

_ Action Plan. The action plan included facilities -
for which a project environmental assessment ~
: document would be submitted within five years
: of an Environmental Assessment Board decision
~ on the Demand/Supply Plan.

<UPDATE 1992>

II] UPDATES TO ELEMENTS IN THE
1989 DEMAND/SupPLY PLAN

: INTRODUCTION

: The options that Ontario Hydro intends to rely :

- on to supply the Province of Ontario with its

- get the most demand management that is prac-

"tically and economically achievable. This -

change does not reflect a reduction in energy :

- service to the customer; it means the same ser-

- electricity needs into the next century are similar

- to the ones proposed in its original submission -

: in December of 1989. What has changed is a

vice with less electricity.
The 1989 plan also identified as a priority |

- maximizing the use of the existing system. |

| deferral of need for major supply reflecting a |

- combination of increased demand management,

Hydro is now planning to extend the life of |

- several of it fossil burning stations.

: and a reduced demand for electricity in the short

- term asa result of the downturn in the economy,

Non-Utility generation is also now forecast |

_ to be able to provide more of the Province’s |

There is also a reduction of longer-term |

- requirements due to life extensions and the —

- potential availability of economic non-utility

- generation, as well as further development of -

- demand management.

electrical needs than originally foreseen.

The development of the remaining eco- —
nomic hydraulic potential remains a priority :
option, but Hydro has recognized changes in

: relations with aboriginal peoples. The hydraulic :

Two developments in particular have led |
- the UPDATE take into account the special inter- :

- to the increased demand management targets.

_ There is the prospect of greater opportunities

: for demand management through higher elec- :

- trical efficiency standards from the government.
- In addition, new legislation will provide the

plans that Ontario Hydro has incorporated into -

ests of the aboriginal community. :
The overall result of these changes has |

~ required an update to Hydro’s proposal - even :

: though the revised median forecast (which :

_ Opportunity to promote alternative fuels in |

_ applications where electricity is not the most

: appropriate energy and where there are benefits |
- to the customer and to Hydro. With these :
- developments, the higher targets for demand _

management flow from the planning strategy :

: for the 1989 DSP which said that Hydro would :

takes into account the effects of fuel switching —
and higher standards) is still within the range —
of probability defined in the original 1989
submission. :

Although the need for major supply is sig-
nificantly deferred, those options, including .
fossil and nuclear facilities, and purchases, |

<Chapter Three>

11

<UPDATE 1992>

Figure 5 Options to Meet Demand by 2014

- should remain open for future consideration. |

: In addition, other supply options are also being 2
: studied to see if contributions can be made |

- from non-traditional sources such as fuel cells. -

MORE ELECTRICITY SAVINGS

~ One of the most ambitious energy savings pro- |
_ grams in North America will help Ontario’s ©
: electricity customers (residential, commercial, :
- agricultural and industrial) get the best value ©
for their energy use. 2

Ontario Hydro offers incentives to users |

- and manufacturers of electrical appliances and
- equipment to promote more efficient products. -
- The process of adopting more efficient equip- ©

- ment can be accelerated through government -

- legislation. Hydro is working with government _

: MH 1989 Plan
M@ UPDATE
12
10
8
6
4
new
oO
0
-2
-4
-6
-8
-10
2 ids) cs © S = 2
oe B €5 = = 5
5S €° s B 5
ee as = S =
S S ee
Figure 6 Electricity Savings by the Year 2014
12
LJ Fuel
Switching
10
( Energy
3 Efficiency;
Improvement:
=e, ae ® Load Shifting
=
Customer
i Interruptible :
Loads
2
0

1989 Plan 1992 UPDATE

- to implement higher electrical efficiency stan- —

dards in many areas as well as energy efficient -

: building codes.

In June of 1991 the Provincial Government |

' announced that it was proposing changes to ©
~ the Power Corporation Act which is the main |
- governing piece of legislation for Ontario ©

Hydro. Proposed changes would allow Hydro —
to promote alternative forms of energy (some- |

' times known as “fuel substitution” or “fuel |

switching”) where it is in the customer’s and |

' Hydro’s interest to do so.

An example of this would be to convert |

- houses heated with electrical forced air furnaces
' to natural gas furnaces. This will reduce cus- ©
- tomers’ heating costs.

These changes have allowed Ontario Hydro |

- to raise its forecast of savings as a result of |

demand management measures from 5,570 MW |

| to 9,860 MW by 2014. This increase in demand —
- management savings helps defer the need for -

| major supply options.

<Chapter Three>
12

_ GETTING MORE USE FROM THE
_ EXISTING SYSTEM

- Ontario Hydro’s existing generating stations
- will still meet most of the requirements for

- equipment, components do wear out and need :

to be replaced. When Ontario Hydro developed

the original Demand/Supply Plan it assumed :
that about one-fourth of the existing system :
: would be retired by the end of the forecast :
: period. This need to replace retiring generation 2

: capability was a significant factor in the need
- for new stations.

The UPDATE now assumes that Hydro’s

useful lives extended past their 40 year retire- |

: ment date. There is increasing confidence that

the life extension of fossil plants can lead |
: to economic benefits. With life extension of :

: fossil stations it is also planned to install

additional environmental control equipment. :
Hydro would start in the near term to increase
capital and operating and maintenance |
7 expenditures to ensure that the facilities will :
: continue to be productive past their original :

- retirement date.

- With the extension of the life of fossil sta- 2
: tions it is now expected that by 2014 about :
: 4°300 MW of capacity that would have been
: lost through retirements will continue to gen- :
: erate economically, efficiently and in a way :
: that meets high environmental standards. :

- Continued use of this capacity defers the
requirement for new major supply options.

<UPDATE 1992>

CONTRIBUTION FROM NON-UTILITY
_ GENERATION

: Hydro has been placing increased emphasis _
- on non-utility generation since the early 1980s.

- electricity over the next 25 years. As with any — Policies, purchase rates, contractual conditions _

and connection requirements were developed.

- These activities contributed to a growing non- |

utility generation industry.

Non-Utility Generators were looked to in :
the original submission to provide 2,120 MW
of capacity to help meet Hydro’s requirements ©
by the year 2044.
: Potential contribution from this source is
: forecast now to be higher, up to 4,200 MW

| newer existing fossil stations can have their of power by 2014, ifneeded. How much and |

how fast the potential from non-utility gen-

- eration will be realized will depend on Hydro’s

on-going requirements.

Preference is given to non-utility generators :
| that use efficient cogeneration or renewable
(hydraulic) or waste resources. These tend to :
be medium to small projects that reflect the |
cogenerator’s need for process steam or supply —
of waste fuel. Power from large scale fossil- 2 .
_ DEFERRED REQUIREMENTS FOR
_ MAJOR SUPPLY OPTIONS

fuelled generating stations to meet electricity

: demand will continue to come from Ontario

Hydro’s own plants.
Getting the most from Hydro’s existing sta-

tions remains a priority, and much of Hydro’s :
requirements over the short and medium term ,
might be met more economically through
Hydro’s own fossil stations. Because non-utility :
- generation is a flexible option with short lead —
- times, it makes sense to utilize its potential :
: in accordance with net requirements once con- ,
tributions from demand management and
: Hydro’s own stations are taken into account.

<Chapter Three>

13

| groups.

| CHANGES TO THE HYDRAULIC PLAN

: The 1989 Demand/Supply Plan projected that

2,850 MW of new hydraulic capacity could be
economically developed by the year 2014.
Hydro’s planning approach identified

: hydraulic as a priority option. However, since

the 1989 Plan, the relationship between the |

: Ontario Government and the First Nations in |

Ontario, and the relationship between Hydro |
and aboriginal peoples have evolved. |
As a result, Hydro officially suspended plan-

- ning for six new stations and two extensions |

to existing stations on the Moose and Abitibi -

- Rivers until a process for co-planning studies |

related to Hydro developments in that Basin

: has been agreed to by the affected aboriginal

Primarily as a result of these changes, :
Ontario Hydro estimates that up to 1,800 MW -

_ of additional hydraulic capacity can be relied :

on for planning to 2014, and approvals are being |
requested consistent with this estimate.

: The original DSP submission included requests :

for approval of the need for two nuclear sta-
tions, a number of natural gas-fired combustion -
turbine units, some of which could be converted —
to combined cycle or coal gasification units —
at a later date, and a major transmission line —
to carry purchased power from Manitoba.
In the UPDATE, Ontario Hydro is request-

: ing the approval for the requirement and ratio-
: nale for the transmission facilities to incor-
: porate the Manitoba purchase. The purchase
: will provide approximately 1,000 MW starting
- in 2000.

<UPDATE 1992>

GW

Figure 7 Capability of the Existing System to Meet Demand
with Life Extensions
45

40 eae ial

35 with Life
Extensions

1992 94 96 98 2000 02 04 06 O08 10 12 14
Year

Existing System

Existing System :

<Chapter Three>
14

The downturn in the economy means that |
in the short term there is less urgency for new

supply. The forecast, after allowing for the : :

effects of more demand management, also ©
indicates a need for approximately 6,000 MW
of additional major supply by the year 2014, ©
with the first plants coming into service about
2009-2011. :

These developments mean that the need —
date for major supply has been deferred beyond
the point where it is necessary to request :
approvals at this time. :

Major supply options for the future are —
nuclear, fossil (natural gas, coal and oil) and :
future major purchases. In the past, nuclear |
stations in Ontario have generally been built 2
as four-unit (4x880 MW) stations. In the future, :
different sizes and configurations would be —
considered. :

<UPDATE 1992>

IV THE PLAN UPDATE

_ INTRODUCTION — ELEMENTS
| OF THE PLAN UPDATE

- addition, Hydro is investing $6 billion in :

' demand management over the 1990s.

: In summary the main features of the UPDATE :

- plan are:

Figure 8 summarizes the changes in Hydro’s
25 year plan. Figure 9 summarizes the changes -

in the near-term Action Plan and the approvals

' @ increased use of demand management due -

to greater opportunities,

. © effective use of the existing system, includ-

ing the life extension of fossil generation

and the timely retrofit of improved envi-
- Environmental Impacts |
- Ontario Hydro’s reliance on demand manage- |

ronmental controls to life extended fossil
- plants,
- © use of non-utility generation as required,

requested.

PLAN UPDATE IMPACTS

" ment, non-utility generation and hydraulic ©

© proceeding with a reduced amount of |

hydraulic development,

_ © development of transmission to incorporate |

the power already contracted from |

: Manitoba, and
: © deferral of major supply.

generation help to reduce the need for major :

| supply options and their associated environ- |

mental impacts.
Furthermore Hydro is planning additional -

~ environment control measures to existing sta- -

- tions to mitigate impacts.

The hydraulic capacity is expected to be ©

added to the system (subject to project specific

: environmental assessment approvals) over the :
| period 1997 through to 2008. The Manitoba -
: purchase will start delivering power to Hydro’s

grid by the year 2000 provided timely trans- :

: mission approvals are obtained.

Environmental regulations will likely
become more stringent over the planning :
period. Extending the lives of fossil stations —
will be accompanied by improved environ- |
mental controls such as combustion process 7
modifications (CPM) and selective catalytic :

- reduction (SCR) units for controlling NOx air :

The approvals amount to 2,800 MW of |
- new capacity. The updated plan involves about

: $7 billion in investment in new facilities. In ;

emissions.
Figure 10 shows how the number of fossil -
units that are planned to be fitted with |

<Chapter Four>

15

<UPDATE 1992>

Figure 8 Hydro's 25 Year Plan :

Option

Demand Management
NUG

Manitoba Purchase
Hydraulic

Fossil

Nuclear

The 1989 Plan
Additional Amounts by 2014 Retirements by 2014
5,570 MW

2,120 MW
1,000 MW
2,849 MW
5,376 MW 6,654 MW
8,810 MW 2,060 MW

1992 UPDATE
Additional Amounts by 2014 Retirements by 2014
9,860 MW
4,200 MW
1,000 MW
1,800 MW
6,000 MW of major supply 2,366 MW
required by 2014 2,060 MW

Figure 9 Hydro's 5 Year Action Plan and Request for Approvals

Options for Which Approval not Required
Demand Management
Non-Utility Generation
Approvals Requested
Option
Manitoba Transmission
Hydraulic Generation
Major Fossil and Nuclear Supply

CTU

CTU

CTU/IGCC

CTU/CC

CANDUA

CANDU B

The 1989 Plan

Implement to achieve 5,570 MW by year 2014
Implement to achieve 2,120 MW by year 2014

Capacity
1,000 MW
2,010 MW

672 MW
672 MW
2,016 MW
1,008 MW
3,524 MW
3,524 MW

(up to)

1992 UPDATE

Implement to achieve 9,860 MW by year 2014
Implement to achieve 4,200 MW by year 2014

Capacity

1,000 MW

1,800 MW

Need for Approvals Deferred

<Chapter Four>
16

<UPDATE 1992>

Number of Units

Figure 10 Environmental Enhancements
1989 Plan vs 1992 UPDATE

20
15
10
5
0 ] ]
SOx NOx NOx Particulates
Flue Gas Combustion Selective Improved
Desulfurization Process Catalytic Particulates
Modification Removal Recovery

@ 1989 Plan
Mi 1992 UPDATE

improved environmental controls is increased
over what was planned in the 1989 Plan. This

- would allow Hydro to meet stricter emission
- control regulations anticipated in the future.

- Other technologies will also be considered,

- and emission control technologies may be sub-

- ject to environmental assessments.

Flue gas desulphurization (FGD), scrubbers,

| are planned for 12 units at major fossil burning

plants. To control particulates, improved elec-

' trostatic precipitators or other measures will

be implemented.

In the case of CO, emissions, there are no |

- current regulations. However, a target of holding

- CO» and other greenhouse gases at 1990 levels -

- by the year 2000 was endorsed by the Federal -

Figure 11 Options to Meet Future Requirements by 2014

1989 Plan

1992 UPDATE

_| Purchases

- Government.

There is no current commercially available :

_ method of removing CO, form fossil emissions.

2 At present the only way to reduce CO) is to |

Electricity Savings
Major Supply

(Manitoba and :
non-utility generation)
Hydraulic ;

Life Extensions

: reduce fossil burn, improve the efficiency of
: combustion, convert from coal to natural gas, |
- orto substitute other forms of generation. Some —
: mitigation measures such as tree planting can

off-set CO» emissions.
NOx controls in the form of combustion :

| process modifications or SCRs are planned for

- installation at major fossil stations.

There are several approaches to reducing fossil

- emissions. One approach to controlling emissions

- is to use demand management to reduce the
requirement for generation. Another approach
_ js to remove emissions with environmental con-
- trol technology. Another is to use cleaner fuels
: in fossil stations, for example low sulphur coal
- instead of high sulphur coal, or natural gas

- instead of coal. An additional approach is to

- use a different kind of generation altogether

- such as nuclear or hydraulic generation.

<Chapter Four>

17

Ontario Hydro will be subject to environ-

- mental regulations of the Municipal Industrial

Strategy for Abatement (MISA). This strategy |
is aimed at eliminating the discharge of per- :
sistent toxic substances into water bodies. :

Hydro plans improved water treatment facilities ;

at all stations.

duction of additional nuclear used fuel will :
have to be accommodated. Any proposed :

nuclear used fuel disposal facility would have :
to be able to accommodate used fuel from both
existing and possible future new stations. The :
concept for such a facility is currently being |
reviewed through the Federal Environmental

review process.

Financial Impacts

- specifically, its impact on the customer’s elec-
tricity bill.

The higher targets for demand management
- and non-utility generation included in the :

- UPDATE will defer the need for new major

- will mean lower long term customer costs than :

_ relying predominately on major new supply.

If the new major supply is nuclear, the pro- :

<UPDATE 1992>

Customers can also help manage their elec- |
tricity costs by participating in demand man- :
agement programs. A wide range of programs |

available to all types of customers can lower

- the amount of electricity they use for the same |

service.

Another important element of the financial -
outlook is the impact on the Corporation’s bor-

rowing requirements. Hydro’s borrowing

requirement is expected to range from $2 billion ©
to $4 billion annually (in 1991$) for most of :
the next 15 years, rising to about $5 billion ©
by the end of the planning period to fund con- -
- struction of new major supply facilities. Under
- the current outlook, the borrowing requirement -
over the planning period is lower than that :
One of the critical aspects of the plan UPDATE
' is its effect on electricity prices or more :

at the time of the original Plan by about $9 |
- billion or 12%, largely due to the deferral of
_ new supply.

DEALING WITH UNCERTAINTY

: Hydro is confident that this updated plan will :
_ supply facilities in the long term. This approach :

continue to deliver reliable power on demand

to the province’s 3.5 million electricity cus- :
tomers. The current most likely forecast indi- :
: cates that Ontario will require additional supply :
: (beyond the Manitoba purchase and the :
: hydraulic projects) in the 2009-2011 time period. :
Ina period where rapid growth in demand 2
2 over the short term looks probable, it would
: make sense to seek approvals, as the 1989 Plan :
: did, based on the upper range of the forecast. :

<Chapter Four>
18

The circumstances of the UPDATE suggest :
that less supply will be needed, and later. There —
is the time and flexibility to respond to upper |

growth, should it materialize, with shorter lead -

time options such as purchases, CTUs, demand :

- management programs, non-utility generation, :

and the use of stations currently out of service.

It then becomes more realistic to request |

: approvals based on planning around the median :

forecast, as the UPDATE has done.

There is uncertainty associated with any :
plan, especially one that has such a distant plan-
ning horizon as the Demand Supply Plan. This :
uncertainty requires that Hydro revisit the plan —
ona regular basis to ensure that the forecast -

- and assumptions are still valid. Recognizing :

the continuous nature of planning is important :

both for Hydro, and for the ongoing public :

7 review of Hydro’s plans.

The actual results will be monitored closely :

- to ensure that appropriate actions are taken :
~ to ensure continued reliable electricity service. :

In this respect, Hydro’s partnership with gov- |

- ernment, utilities and homeowners in meeting |

priority demand management objectives is |
critically important.

<UPDATE 1992>

V Puslic REVIEW

| FORMAL REVIEW: THE DEMAND/SUPPLY :
- Demand Supply Hearing

PLAN HEARING

: The formal mechanism for reviewing the

- Demand/Supply Plan is a hearing before the |

Progress of the

¢ December, 1989 — Ontario Hydro submits :

2 Demand/Supply Plan to Minister of the |

: provincial Environmental Assessment Board .
- (EAB). In its 1989 application to the Board, :
~ Ontario Hydro as the proponent asked the EAB
: to rule on the requirement and rationale for 7

- aportion of the facilities associated with its

: 25 year plan - in particular for developing :

- hydraulic generation, a transmission line to -

- carry the power purchased from Manitoba,

Environment.
¢ January, 1990 - Minister of the |
Environment issues order requiring a hearing :
under the Environmental Assessment Act.
¢ April, 1990 - The hearing begins to deter-
mine status of those groups and individuals -
wishing to participate in the hearing. :
¢ June, 1990 — Government Review of :

: Demand/Supply Plan is released.

- and a number of natural gas-fired units and —

: other major supply facilities (fossil and nuclear).

¢ June, 1990-December, 1990 - Funding :

: Panel awards over $23 million in funding to :

3 The DSP hearing was asked to rule that :
: there was a need, and that the proposed tech- :

- nologies were appropriate ways of meeting |

_ that need. For the projects to proceed, there |
- would have to be, in addition to the DSP |
- Hearing ruling, an environmental assessment

~ oneach project to determine the specific char-

: acteristics of the project and the suitability |

_ of the site. These project environmental assess-

: ments might also require a hearing.

29 intervenors in the hearing
¢ April, 1991 - EAB begins to hear evi- -
dence from Ontario Hydro
¢ December, 1991 - Evidence, including :
cross-examination, has progressed through six -
of Ontario Hydro’s witness panels. :

UPDATE to the Plan and Request
for Approvals

: Long-term plans have to be flexible enough |

to evolve with changing circumstances. |

- Changes in circumstances and updates to spe-

| cific components in the Demand/Supply Plan :

- have required Hydro to integrate these adjust-

<Chapter Five>

19

Hydro’s Request for Approvals |

The Environmental Assessment Board is
reviewing Hydro’s request for approvals for
the need for facilities. A project-specific envi-
ronmental assessment and review is needed
to determine whether and where such facili-
ties can be sited.

The Approvals that Hydro is requesting in
the Environmental Assessment Board hearing
are:

e The requirement and rationale for trans-
mission to incorporate electricity purchased
from Manitoba, and

e The requirement and rationale for up to
1,800 MW of hydraulic capacity.

Jn determining these approvals, the range
of considerations before the EAB include:

e How much demand management, including
fuel switching, is it appropriate to rely on for
planning purposes?

e To what extent should reliance be placed
on NUG, and priority be given to certain types
of NUG such as cogeneration?

e Is there an adequate requirement and
rationale for including a range of hydraulic
capacity in electricity planning?

e ls there an adequate requirement and
rationale for the transmission to incorporate
the Manitoba Purchase?

e In electricity planning, what is the appro-
priate role of fossil generation, particularly
with respect to reliance on natural gas, and
with respect to greenhouse gases and related
environmental considerations?

° In electricity planning, what is the appropri-
ate role for the nuclear option, taking into

account both its advantages and disadvantages?

<UPDATE 1992>

How the Demand/Supply Plan Hearing

Proceeds

The hearing has proceeded with Ontario Hydro
presenting its evidence through, and being
cross-examined on, six panels in sequence,
each addressing a particular aspect of the

Plan. The panels are:

Panel
1 Economics and Forecasting Panel
2 The Existing System Panel
3 Costing Concepts and
Avoided Cost Panel
4 Demand Management Panel
5 Non-utility Generation Panel

6 Hydraulic Generation Panel

Upcoming panels will address additional
aspects including purchases and transmis-
sion, fossil generation, nuclear generation,
major supply and integrated demand/supply
plans.

Hydro calls on its witnesses to give evi-
dence, and they are subject to cross-examina-
tion by intervenors in the Hearing on a
panel-by-panel basis. After Hydro has com-
pleted its evidence in this way, the intervenors
will call their witnesses, and they will likewise
be subject to cross-examination by Hydro and

other intervenors.

<Chapter Five>
20

3 ments in an overall Plan UPDATE and the asso- |
- ciated approvals sought.

Hydro is not withdrawing its application |

: currently before the EAB. It is continuing to :
: seek approvals based on a five-year Action :
: Plan, and, on this basis, will continue to seek :
- approval for the requirement and rationale ©
2 for transmission associated with the purchase :
| from Manitoba, and for up to 1,800 MW of :
: hydraulic generation. :

: COMMUNICATIONS ABOUT THE
2 DEMAND/SUPPLY PLAN

: The development of the 1989 Demand/Supply :
: Plan offered numerous opportunities for public :
: and government input and review during key :
: stages of the Demand/Supply Planning process. :
: Figure 12 outlines the evolution from an initial :
2 study by Hydro of the options for meeting :
: future needs, through consultation with provin- :
: cial organizations and regional community lead- :
: ers, review by government of the strategy, to :
the release of the Plan in December, 1989. :

Following the Plan’s release, public feedback 3

- activities included Plan information centres
2 in over 70 communities, where more than 3,000
: people responded to questionnaires about the :
2 Plan. These centres gave Ontarians a chance :
: to ask questions about the Plan, and to express :

- concerns and offer views.

With the start of the Demand/Supply |

Hearing, there is now a formal review process |
~ by which the public can express their views,
2 either directly or through one of the more than :
- 150 groups and organizations that are partici- -
: pating in the Hearing. :

Because planning is intended to serve elec-

- tricity customer needs, keeping in touch with |
- the public is a priority. With the release of this

| UPDATE, Hydro will continue to respond to .
requests from groups and organizations for pre-

> sentations or more detailed information.

For further information, or to order addi- |
- tional copies of this material, please phone toll-

- free 1-800-263-9000.

<UPDATE 1992>

Figure 12 Opportunities for Public and Government Review

Demand/Supply Options Study
(DSOS)
1984-1986

* Ontario Hydro Consultation Program:

— Provincial Organizations (September 1985 — March 1986)

— Regional Community Leaders (November 1985 — June 1986)

— Municipal Utility Meetings (February — June 1986)
° Select Committee on Energy (July 1985 — July 1986)

Draft Demand/Supply
Planning Strategy (DSPS)
1987-1988

¢ Ontario Hydro Employee Presentations (January — June 1988)
* Select Committee on Energy (February 1988 — January 1989)
° Electricity Planning Technical Advisory Panel (March — July 1988)
° Review by Government Ministries (March — July 1988)

* Ontario Hydro Presentations to Municipal Utilities (May —June 1988)
° Other Related Activities:

— Ontario Nuclear Safety Review (December 1986 — March 1988)
— Ontario Nuclear Cost Inquiry (March — November 1988)
¢ Thermal Cost Review (February — August 1989)

Demand/Supply
Planning Strategy (DSPS)

March 1989

Demand/Supply Plan (DSP)
December 1989

¢ Public Feedback Program

— Information Centres (January — April 1990)

— Head Office Initiatives (January — May 1990)

— Regions Branch Initiatives (January 1990 — ongoing)

— Government Relations Initiatives (January — June 1990)

— Public Communications Initiatives (December 1989 — ongoing)
* Environmental Assessment Board Hearing (April 1990 — ongoing)

<Chapter Five>
21

Ontario Hydro

Let’s give tomorrow a hand.

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